Having a son who works for H&R Block has its perks: 23-year-old Carl Matthew Moral handled his parents’ filings and got them an estimated $3,700 back. His father, Jimmy Moral, plans to put the refund toward a new car for his son. With Tax Day less than two weeks away, many early filers are seeing bigger refunds: the average so far this year is $3,521, up about 11% from the same time last year, according to IRS statistics. Those numbers could shift as more returns are processed.
The Republican tax cuts in the 2025 One Big Beautiful Bill Act are mainly responsible for the bump — worth about $350 on average so far. The law expanded the standard deduction, increased the child tax credit and added deductions for tips and overtime.
“There is a kind of sugar-rush effect,” says David Tinsley, senior economist at the Bank of America Institute, and this year refund recipients are enjoying a bigger spike. Bank of America Institute credit and debit card data show discretionary spending among early filers is up on electronics, hotels, lodgings and restaurants compared with a year earlier.
But refunds aren’t all splurges. The data show Americans are also paying down credit card debt, topping off savings and using refunds for essentials like groceries and rent. About two-thirds of filers said their tax refund was very or somewhat important to their financial situation, according to a LendingTree survey, and a growing share of respondents said they rely on their refund. “People aren’t just going out and blowing their tax refund on fun and existing stuff,” says Matt Schulz, LendingTree’s chief consumer finance analyst. “They’re generally putting it toward essentials.”
Some filers feel their refunds are being swallowed by higher gas prices. Sarah Granderson, a recent Jacksonville State University graduate, invested her $400 refund in stocks but says it doesn’t feel like a windfall because fuel costs offset the benefit: “Even though I did get the money back for taxes, it does feel like that money has gone straight back to my gas,” she says. Researchers at the Stanford Institute for Economic Policy Research estimated households could pay about $740 more for gas this year — an estimate that assumed a three-week closure of the Strait of Hormuz, a period that has already been surpassed.
While refunds are bigger this year, the increase isn’t as large as some analysts expected. Based on government estimates, the Bank of America Institute had predicted the average return would be closer to 25% higher than last year’s. “It’s still net positive, but it’s probably not as positive as people were hoping for,” Tinsley says. Timing and the remaining unprocessed returns could explain some of the difference, though IRS comparisons are made at the same point in the season.
Expert advice on what to do with a refund
– Pay off highest-interest debt first, usually credit cards, says Mandi Woodruff, host of the Brown Ambition podcast: those rates can be debilitating.
– If you don’t have three to six months’ worth of emergency expenses saved, consider using the refund to build that safety net, says Rich Guerrini of PNC Wealth Management: “This is a big, big priority.”
– Consider investing the refund in the market or in yourself — for example, a certificate course that could increase future earnings. Guerrini notes investing in yourself often yields the best return.
– It’s also reasonable to treat yourself with part of the refund while using the rest to reduce debt. “Just because you have debt doesn’t mean you’re not a human being who deserves some time off,” Woodruff says.